Whether you're insured, uninsured, or underinsured, most will agree that in some way or another, they're confused about how insurance companies benefit them, and can't clearly discern the good from the bad, not to mention the ugly. I have to admit, until I hunkered down with the latest literature on the subject, I was one of the said majority. Insurance providers affect all the major players in health care - consumers, doctors, hospitals, pharmaceutical companies, the government - and now that reform has the nation's attention, this is the time to gain some perspective on the subject.
Employers large and small are held tight by the high costs to insure their employees even when their employees can be dropped at moments notice when they're sick, all at the mercy of the insurance providers. Consumers are struggling to pay monthly premiums and are left feeling helpless and without much choice; either pay the increasing costs, or be left to figure it out on your own, uninsured. But don't forget that even if you are covered under a plan, that doesn't necessarily mean that you'll be covered when you get sick. What? You're surprised? Believe it or not in many cases it's true. Thanks to medical underwriting, you can be denied coverage or dropped for pre-existing conditions, or failure to disclose information of a potential illness in the future. This is an industry built on loopholes. Just to give you an idea, a person can be denied coverage from anything ranging from acne to cancer. The two things I deduct from the example are 1) try as I might I cannot find any information linking acne to future illnesses, and 2) wouldn't having cancer be a reason for someone to need insurance? And as much as you want to forget that pesky knee injury from your college sports days, your insurance provider won't let you.
Medical Underwriting - Wikipedia
The reason I chose Insurance Companies as this week's discussion is because as I'm reading about the debated bill from the Senate Finance Committee, I'm finding that Insurance Companies are given the advantage whereas other stakeholders are not. The proposed bill would require all U.S. citizens to have insurance (or else pay a $1,900 annual fine), which would create millions of new insurance customers, but without the government providing a public option and creating government-run competition. Insurers: 2, The People: 0, for those who are keeping count. Speaker of the House Nancy Pelosi, however, is an advocate for a public plan because providing one for people under 65 could save as much as $100 billion over the course of the next decade (of the $1 trillion current tab). If the government paid health care providers at the low rate that they pay for Medicare, government would have savings to prevent cuts to current plans and provide more subsidies to lower income people/families who need to buy insurance.
As previously mentioned the bill includes an individual mandate which would actually serve well to insurance costs because the cost to cover healthy people would balance out the high premiums in place to cover the sick. There are a few risks in this, though, one being that the healthy, and most often the young, are those that are uninsured and happy at that. The fine incurred by those who don't comply with individual mandate is actually much less than what one might pay in an insurance plan. After heavy criticism from Republicans, Sen. Baucus cut the annual fine from $3,800 to $1,900 whereas the average cost of a plan is upwards of $8,000. Seems like a pretty easy math to me - pay the fine and avoid the sky high cost of an insurance premiums, and pay out of pocket for care as needed. The risk to insurers in this case is that uninsured people will wait until they are sick to get insurance, which will then drive up the costs to those already insured. As is, the enforcements proposed to manage the market reform is weak and will in turn benefit insurers once again.
Finally, the absence of a public plan lends itself to two potential outcomes, based on the proposed alternative. The Finance Committee has proposed that rather than having a government-run public program, a nonprofit health cooperative will be formed to compete with private insurers. Says Ron Williams, Aetna's chief executive, "We're concerned about the possibility that the co-ops are a back door [to a public plan]." Should the co-ops fail, the government will likely take them over, not to mention being given money from the government to start with. This could be the thorn in the side of insurers. But my concern is that the thorn needs to be bigger to really have a significant impact on how insurance companies manage costs.
Despite industry concerns, critics say the Baucus bill as proposed is favorable to insurance companies. I worry that in order for the proposed bill to pass it will be watered down and necessary market regulations will not be in place to protect consumers from the murky water they're already in. My thoughts are also that with the proposed insurance exchanges that will be put into place to create competition among insurers, consumers need to be kept top of mind. Too often the beaurocratic forces prevail and consumers are left in the dark, but now more than ever, consumers should be able to shop around like they do for cars or houses. There is an absence of educational materials and cost comparison resources - let alone public forums where costs of procedures are made known. There is a significant moral hazard in that the lack of information about actual costs of procedures and payment passing from consumers to providers that overuse is actually encouraged.
As we're seeing, the plan is changing on a daily basis. Stay tuned for next week's latest and greatest.
